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Can You Count on Social Security to Fund Your Retirement?

Kristie Cahill • Aug 03, 2020

Social Security is a critical piece of the income puzzle for most retirees. In fact, half of married retirees and nearly 70% of unmarried retirees rely on Social Security for more than 50% of their retirement income.1
 
Your Social Security benefit amount is based on a few factors, including your career earnings and your age at the time you file for benefits. However, your benefit amount isn’t locked-in forever. It often increases each year because of something called COLA.2
 
COLA stands for “cost-of-living adjustment.” It’s an annual increase in the benefit amount to help recipients cover increases in their cost of living. In 2020, COLA was 1.6%, down from a 2.8% increase in 2019.2
 
Since 2000, Social Security benefits have increased by a cumulative 53% because of COLA. The problem? Retiree spending has increased by more than 99%.2 While COLA can be helpful, it often isn’t enough to match inflation. In fact, since 2009, COLA has averaged only 1.4% annually.2
 
Fortunately, you can implement other strategies to protect your spending power and combat inflation. Below are a few ideas to consider:

Rely on other sources to cover healthcare costs.

Healthcare is one of the biggest drivers of inflation for retirees. In the past 20 years, Medicare Part B premiums have jumped 218%. Out-of-pocket prescription drug costs for retirees have increased 252%. Social Security benefits increased only 53% over the same period.2
 
If the past 20 years are any indication, you can’t count on Social Security adjustments to offset increases in healthcare spending. You may want to consider using alternate strategies, like funding a health savings account (HSA) that you can use in retirement for out-of-pocket costs.
 
You also may want to explore various Medicare Advantage policies. These are Medicare policies offered through private insurers. They often cover the same services as traditional Medicare, plus enhanced services. They also may reduce your out-of-pocket costs. A financial professional can help you determine which policy is right for you.

Continue to grow your assets.

You may be tempted to become more conservative in retirement. After all, you don’t want to lose what you worked so hard to accumulate over several decades. Adjusting to a more conservative allocation may be the right move for your needs and risk tolerance. However, it’s also important to continue to grow your assets.
 
Growth can help you increase your income over time and keep up with inflation. You can give yourself a personal COLA with increased distributions from your retirement accounts. There are a wide range of strategies you can use to potentially grow your assets, but also minimize your exposure to risk. Again, a financial professional can help you implement the right strategy for you.

Ready to develop your retirement income plan? Let’s talk about it. Contact us today at Haven Wealth Management. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.

3 Financial Developments to be Thankful for in 2020

By Kristie Cahill • 18 Nov, 2020
This year has been a rollercoaster ride. COVID has dominated the headlines and impacted every aspect of our lives. It has shut down businesses, schools, and workplaces. It’s changed the way we interact and socialize. And of course, it has deeply impacted the economy and the financial markets.

What Monsters are Lurking in Your Portfolio?

By Kristie Cahill • 13 Oct, 2020
This may be the scariest time of the year, but it only lasts a month. The truth is there could be gaps in your investment strategy that could come back to haunt you for years or even decades. Below are a few common retirement planning mistakes that can have frightening long-term consequences. If any of these sound familiar, it may be time to meet with a financial professional.

The Problem With Robo-Advisors

By Kristie Cahill • 05 Oct, 2020
Technology has revolutionized every aspect of our lives, so it shouldn’t come as a surprise that tech-based investment platforms, known as robo-advisors, are becoming more popular. Robo-advisors were created in the aftermath of the 2008 financial crisis, as an alternative to traditional financial advisors and investment managers. This year, robo-advisor platforms crossed the $1 trillion threshold in assets under management.

Is a resurgence threatening our recovery?

By Kristie Cahill • 15 Aug, 2020
The United States set a somber record on Thursday, July 16, 2020, with more than 75,000 new COVID-19 cases. In fact, the U.S. set new single-day COVID-19 records 11 times between June 17 and July 16. Dr. Anthony Fauci predicts the country will soon top over 100,000 new cases each day.

Is it time for an economic recovery?

By Kristie Cahill • 01 Jul, 2020
The first half of 2020 has been a rollercoaster ride. The COVID-19 pandemic completely altered our way of life and threw the economy into a tailspin. Most states have started the reopening process, but there is still significant uncertainty about the long-term impact of coronavirus and how long the pandemic will continue. Federal Reserve Chairman Jerome Powell recently said the economy faces a “long road” to recovery, and predicted the process may take through 2022.1 Whil [...]

What's Next for a COVID-19 Economy?

By Kristie Cahill • 09 Jun, 2020
The economic fallout from the coronavirus pandemic continues, even as states start to reopen restaurants, retail stores, and other businesses. The crisis brought an end to the bull market that started in 2009 and threatens to usher in a recession.1 What does the future hold for the stock market and the economy? When will the economy recover? And how will this crisis impact your retirement and your financial future? It’s impossible to definitively answer those questions. In [...]

What Do Zero-Percent Interest Rates Mean for You?

By Kristie Cahill • 16 Apr, 2020
​The coronavirus pandemic has launched the country, and the world, into uncharted territory. In much of the world, society is essentially shut down. Schools and large events are closed. People are staying in their homes. Businesses have effectively closed across the country. The economy has felt the impact of the pandemic. Stocks have declined significantly, and unemployment has surged. On March 3, the Federal Reserve took action by cutting the fed funds rate to 0%. The Fed exp [...]

What Does the 2020 Election Mean for Your Portfolio?

By Kristie Cahill • 26 Mar, 2020
​The 2020 election cycle is in full swing. It’s primary season, which means the general election is right around the corner. Before you know it, the two major parties will have their conventions and we’ll be heading to the ballot box. Of course, you may already have election fatigue. From the local level all the way up to national races, candidates are already flooding television with political ads. As is the case in most presidential elections, candidates are [...]

How Can You Improve Your Retirement Strategy?

By Kristie Cahill • 28 Feb, 2020
It may be the end of February but it’s not too late to make a few resolutions for the new year and the new decade. Take a look at a few of the weirder resolutions we’ve heard… In 1669, author Jonathan Swift made a resolution to “not be fond of children.” Mathematician Godrey Hardy made a resolution in the 1930s to be the first man to climb Mt. Everest and to become the combined president of the USSR, Germany, and Great Britain. That would have been quit [...]

What will the economy look like in 2020?

By Kristie Cahill • 13 Feb, 2020
It’s the second month of a new year, which means it’s time for everyone to make predictions about what’s in store over the next 10 months. Clearly, it’s impossible to predict the future. However, that doesn’t stop analysts and so-called experts from making their best guess. As you can imagine, the economic predictions for 2020 are all over the map. Below is a sampling:An analyst on TheStreet.com predicted that there would be more volatility, but the majo [...]
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